Those in the highest quarter of income have average balances of more than twice that those in the next-highest, and median balances of more than three times as much. Image: Chones/Shutterstock.com
By: FEDweek StaffAs Generation X approaches retirement, most in that age group “are failing to meet retirement savings targets,” according to a study by the National Institute on Retirement Security.
A main cause, it adds, is that only 14 percent of that generation—born between 1965 and 1980 and with the oldest now only four years from the minimum Social Security claiming age of 62—have a defined benefit plan, such as the FERS civil service benefit. Some “may have participated in one early in their career, but lost that coverage as private companies froze and closed their pension plans,” it said.
It said the average retirement savings for working Gen Xers in 2020 was $130,000, which “is not nearly enough to finance a secure retirement, but it comes with two even more stark warnings. First, the median account balance [the point where half are above and half below] was only $10,000. Second, 40 percent of Gen Xers had accounts with zero balances.”
“These numbers should be alarming for anyone concerned about retirement security because they indicate that many Gen Xers will not be able to maintain their current standards of living in retirement. This not only has personal costs but may have societal costs as well,” it said.
It said that as is often found in studies of retirement savings, balances are higher at higher income levels—but that the difference is especially “sharp.” Those in the highest quarter of income for example have average balances of more than twice that those in the next-highest, and median balances of more than three times as much.
In addition, while 2 percent of Gen Xers receive financial support from family or others, 5 percent provide it to help parents, adult children or others, and 9 percent receive housing support from family or others while 23 percent are providing it.
On the positive side, it said, retirement savings do increase over time, and those born in the last five years of the Gen X period, who are the closest to retirement, do have the highest rate of savings—suggesting that the rest still have time to improve their retirement security.
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